Statistics disclosed by the Department for Work and Pensions found that since 2007, average private sector pay has risen by around 12 per cent, while many working age benefits have increased by around 20 per cent.

The DWP said the cost of uprating benefits since the 2008 recession alone has been £6.3billion.

The figures demonstrate how working families have faced a greater squeeze on their income while the benefits bill has increased.

The increases have outstripped private pay because by law they have been kept in line with inflation, while many in work have suffered pay freezes as private firms have cut back costs through the double dip recession.

Work and Pensions secretary Iain Duncan Smith is introducing a Welfare Benefits Up-Rating Bill which will enable a time limited 1 per cent increase to many working age benefits and tax credits for 2014/15 and 2015/16.

Other benefits for disabled people such as the disability elements of tax credits and Disability Living Allowance, will continue to increase with inflation however.

Mr Duncan Smith said: “Working people across the country have been tightening their belts after years of pay restraint while at the same watching benefits increase. That is not fair.

“The welfare state under Labour effectively trapped thousands of families into dependency as it made no sense to give up the certainty of a benefit payment in order to go back to work.

“This Government is restoring fairness to the system and Universal Credit will ensure it always pays to be in work.”

More than £90billion is spent on working age welfare every year, the same as the entire education budget.

Mr Duncan Smith has embarked on an assault on what he sees as waste in the benefits system ahead of his major reforms to the benefits system.

Universal Credit will start to be rolled out nationally from October 2013. Mr Duncan Smith is hoping it will ensure people are better off in work than on benefits.

Earlier this week, Mr Duncan Smith claimed in an article in The Daily Telegraph that taxpayers have lost at least £10billion to illicit welfare claimants and fraudsters from “around the world” targeting Britain's tax credit system.

HM Revenue and Customs conducts just 34,000 checks a year on tax credit claims deemed to be “high risk” – fewer than a tenth of the number of investigations into benefits fraudsters. As a result public finances were pushed to “breaking point”, he said.

Last month Mr Duncan Smith backed plans for claimants to be given credits on a card instead of cash to stop them buying alcohol or drugs with taxpayer money.

He said: “For somebody who has a history of drug addiction, giving cash sometimes can lead to further problems.”

Mr Duncan Smith only wants the card scheme to apply to drink and drug addicts. He first suggested the idea at last October's Tory party conference.

Tory backbencher Alec Shelbrooke has also published a Bill to stop all claimants buying anything with payments other than essentials such as food, clothing, energy, travel and housing.